Electronic communications surveillance/off-channel communications was identified by 59% of survey respondents as the “hottest” compliance topic. Advertising/marketing followed closely by 57% of respondents and AI/predictive analytics debuted in third place, with 46% of respondents including this on their list of hot topics. Other hot topics generally aligned with the SEC’s exam, enforcement, and rulemaking priorities. These key focus areas included:

• 37% cybersecurity
• 16% private funds
• 10% conflicts of interest
• 8% vendor due diligence
• 8% environmental, social, and governance
• 6% anti-money laundering
• 6% books and records

Now in its 19^th year, the Investment Management Compliance Testing Survey is a joint project of the Investment Adviser Association, ACA Group, and Yuter Compliance Consulting. It is the most comprehensive resource available for identifying the top concerns of investment management compliance professionals and the types of compliance testing and control practices investment adviser firms are using to address core compliance topics.

Notable Findings

The 2024 survey, conducted online throughout May, covered a wide range of topics and offered extensive insight into common control strategies. In addition to the top compliance hot topics, the survey provided notable findings on subjects such as:

• The industry is focused on SEC exams, with 83% of respondents reporting that they are undergoing an exam or have been examined in the past 5 years. The top examiner focus areas on recent SEC exams were reported as: #1 books and records (58%), #2 advertising and marketing (57%), and #3 conflicts of interest (50%).
• Investment advisers are enhancing their compliance programs, with 65% having conducted or intending to conduct a mock SEC exam, for example, as well as increased testing. A significant portion of respondents (85%) reported that a mock exam prepared them for an actual SEC exam and identified issues and best practice enhancements.
• The top areas of increased testing include: #1 electronic communication surveillance/off-channel communications (73%), #2 advertising/marketing (65%), #3 cybersecurity (57%), #4 vendor due diligence (44%), and #5 books and records (36%). These top areas are in line with SEC rulemaking and enforcement focus areas reflecting a proactive industry; a continuing trend over the last several years. Also, the majority of respondents did not decrease testing in any area.

“With SEC staff calling for a testing program in the compliance rule, and certain rule adopting releases encouraging the consideration of industry common practices, this survey consistently delivers testing and control ideas, trending insight, and practical enhancement opportunities to the industry,” shared Amy Yuter, Managing Principal of Yuter Compliance Consulting. “We are motivated to move into our 20^th anniversary year with feedback of the survey’s value in deciphering regulatory expectations and common industry practice.”

ACA’s Global Advisory Leader Carlo di Florio shared his reflection on the survey saying, “The increasing focus on off-channel communications underscores the need for robust electronic surveillance strategies to mitigate risks and safeguard client data. Marketing, artificial intelligence (AI), cyber, and vendor oversight are other key hot topics investment advisers are testing and grappling with. Investment advisers who prioritize compliance, conduct mock exams, and embrace industry best practices are better positioned to navigate the complexities of today’s regulatory environment.”

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Private markets are the fastest growing segment of asset management, with alternative assets expected to reach nearly $40 trillion by the end of the decade. As institutional and wealth investors increase allocations to alternatives, BlackRock has built a leading private markets franchise to meet this client demand. There is an even greater need for standardized data, benchmarks, and analytics that enable investors to better incorporate private asset classes into portfolios and provide fund managers with better data and tools to deliver outcomes for clients. Private markets data is estimated to be an $8 billion total addressable market and growing 12% per year, reaching $18 billion by 2030.

Preqin empowers investors to make better decisions by providing data and insights that increase transparency and access across the global alternatives market. With a 20-year history, Preqin is a leading independent data solutions provider in private markets with global coverage of 190,000 funds, 60,000 fund managers and 30,000 private markets investors, reaching more than 200,000 users, including asset managers, insurers, pensions, wealth managers, banks, and other service providers. In 2024, Preqin is expected to generate ~$240 million of highly recurring revenue and has grown approximately 20% per year in the last three years.

Through the Aladdin platform, BlackRock provides technology solutions to over 1,000 clients. The combination of Preqin with eFront, Aladdin’s private markets solution, brings together the data, research, and investment process for fund managers and investors across fundraising, deal sourcing, portfolio management, accounting, and performance. Preqin will also continue to be offered as a standalone solution.

“BlackRock’s vision has always been to bring together investments, technology, and data to offer solutions that meet our clients’ needs across their whole portfolio. As clients increasingly evolve their focus from choosing products to constructing portfolios, this shift requires technology, data, and analytics that create a ‘common language’ for investing across both public and private markets. We see data powering the industry across technology, capital formation, investing, and risk management,” said Rob Goldstein, BlackRock Chief Operating Officer. “Every acquisition has been an opportunity to strengthen our capabilities for clients—and in fact, we have been a client of Preqin for many years, and we look forward to welcoming the talented Preqin team to BlackRock.”

“Together with Preqin, we can make private markets investing easier and more accessible while building a better-connected platform for investors and fund managers. This presents a substantial opportunity for Aladdin to bridge the transparency gap between public and private markets through data and analytics,” said Sudhir Nair, Global Head of Aladdin.

“BlackRock is known for excellence in both investment management and financial technology, and together we can accelerate our efforts to deliver better private markets data and analytics to all of our clients at scale.” said Mark O’Hare, Founder of Preqin. “I look forward to joining BlackRock and continuing to play a role in the continued growth and success of Preqin and our customers.” Preqin founder Mark O’Hare will join BlackRock as a Vice Chair after the close of the transaction.

“Private markets continue to evolve and so is Preqin. I am incredibly excited about the opportunities this next phase of growth, together with BlackRock, promises our customers and our employees,” said Christoph Knaack, CEO of Preqin.

Terms of the Transaction

Under the terms of the transaction, BlackRock will acquire 100% of the business and assets of Preqin for total consideration of £2.55 billion or approximately $3.2 billion in cash.

The transaction is expected to close before year-end 2024, subject to regulatory approvals and other customary closing conditions.

Barclays served as lead financial advisor to BlackRock, with Skadden, Arps, Slate, Meagher & Flom acting as legal counsel. Goldman Sachs International served as the sole financial advisor, and Macfarlanes acted as legal counsel, to Preqin.

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“The one word that comes to mind is, ‘Gratitude’. I am so grateful for the clients who put their trust and confidence in us, to our team who shows an unwavering commitment to those we serve and to our dedication to never being complacent, which continually challenges us to do more and at ever-higher levels of excellence,” said Tom Ruggie, ChFC®, CFP®, Founder and CEO of Destiny Wealth Partners. “We are truly honored to stand alongside a stellar group of peers.” The Florida-based independent RIA does business as Destiny Family Office, Ruggie Wealth Management and Nichols Wealth Partners.

Ruggie founded the firm with a mission and purpose to provide compelling wealth and investment management capabilities and services that seek to give clients more freedom to do what they enjoy with those they love. The Destiny Wealth Partners’ team embraces innovation and is committed to delivering financial solutions that can better people’s lives.

According to Key Media, publisher of InvestmentNews, the judging process is conducted by an expert panel of industry leaders and senior representatives and recognizes the significant work and achievements of the nation’s most outstanding advisory team for their excellence over the past 12-months in areas including client service and innovation. Finalists are selected based on their response to questions across a range of qualitative and quantitative criteria and performance metrics. The judging process is independent and rigorous.

Winners were announced at a black-tie gala held on June 20, 2024, at 583 Park Avenue in New York City.

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Cahill is an industry veteran bringing more than a decade of experience at Big Four accounting firms with a background in managing functions for public and large private companies. Most recently, he was a partner at Newport LLC, a national advisory firm. As senior vice president of tax, he will work to elevate the tax division’s operational efficiency, focusing on improving the delivery of advanced tax planning services for high-net-worth and ultra-high-net-worth clients. A qualified attorney, Cahill served as special counsel for Macaluso LLP for a number of years. As a J.D. and certified public accountant (CPA), he has the skill set to address issues not only related to tax and finance, but also with regard to legal and operational functions. Cahill earned his accounting degree from the University of South Dakota and obtained his law degree from the University of North Dakota.

A former business solutions advisor at Finnegan Consulting, Koebnick previously served as a senior manager in international tax and business advisory at Eide Bailly LLP, and a manufacturing tax director at Wipfli LLP CPAs & Consultants. At Nepsis®, he will focus on expanding advanced tax planning and business advisory services to include international tax planning. Koebnick will also be tasked with the distribution of specialized tax credits to reduce the tax liability of Nepsis® clients who qualify for them. Through this program, certain Nepsis® clients will be able to significantly reduce their federal tax liability by purchasing credits at a discount.

“We are determined to take Nepsis® to the next level and are making sure we have the best available talent in house to help us do so,” said Mark Pearson, founder and CEO of Nepsis®. “Jack and Chad will be instrumental for our development, improving the services we can provide to clients as we continue to scale. By sharing their vast experience and providing mentorship, they will play an important role in training our younger personnel and setting us up for continued success.”

The two new hires will report to Bryan Eberle, president of Nepsis® Tax Solutions. Eberle was appointed to the role in January 2023, ahead of the firm’s acquisition of full-service tax, accounting and consulting firm Sevenich, Butler, Gerlach & Brazil, Ltd. (“SBGB”), and has since overseen the continued growth of the program. Since the acquisition, Nepsis® has been able to provide a more holistic and comprehensive view of clients’ finances and address the complex tax situations of high-net-worth families and businesses.

“Jack and Chad are outstanding additions to our talented tax team,” said Eberle. “Their deep knowledge and extensive backgrounds, particularly in advanced tax planning and business advisory services, will greatly benefit our high-net-worth clients with complex financial challenges. Welcoming professionals of their caliber underscores our commitment to providing comprehensive and customized tax solutions.”

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“Having worked side-by-side with our team over the last three years, I’m humbled by what we’ve accomplished so far and excited to continue to build on our strong foundation,” said Murphy. “At FrontStream, we wake up every day to serve our customers, and I take immense pride in the value we deliver to our customers, regardless if they are a small school PTO or a large enterprise with household name recognition.”

Prior to joining FrontStream, Matt oversaw all aspects of a diversified investment portfolio, implemented strategic operational initiatives, led turnaround efforts for underperforming assets, and successfully monetized non-core assets as the head of a family office. Murphy is also the founding partner of MHI Holdings, a privately held real estate investment firm. Before that Murphy held roles at Stelliam Investment Management managing investments in the Energy Sector, as well as positions at Apax Partners and Goldman Sachs in investment banking.

Matt holds an MBA from The Wharton School of Business and earned his undergraduate degree from Georgetown University.

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“The SEC’s approval of spot Ethereum ETFs is proof that digital assets are a legitimate asset class worthy of consideration by all investors,” said Ric Edelman, CBDA, DACFP Founder and the nation’s most acclaimed financial advisor. “Just as we have seen massive asset flows into spot bitcoin ETFs, which debuted only a few months ago, we will likewise see substantial flows into these new products.”

“Bitcoin and Ethereum are the Coke and Pepsi of crypto,” Edelman added, “and now that there are spot ETFs for both of them, you can expect an array of additional ETFs to enter the market, featuring combinations of the two, leverage, and active management. The investment opportunities are going to grow exponentially, as will the prices of both of these assets.”

The approval of spot Ethereum ETFs represents a landmark moment for the cryptocurrency market, providing financial advisors, institutional investors and retail investors with inexpensive, easy access to Ethereum in a highly liquid, transparent and familiar package.

“We expect the availability of these ETFs to drive significant inflows into Ethereum, mirroring the enthusiastic reception of spot bitcoin ETFs, which launched in January and have seen tens of billions of dollars in asset flows.”

Known as “programmable money” or a “smart contract” platform, Ethereum allows for more flexible and complex financial transactions than bitcoin. This fundamental feature explains why Ethereum is the second-largest digital asset by market cap, serving as a commercial application useful in virtually every industry in the world. Financial advisors can leverage these new ETFs to diversify and rebalance their clients’ portfolios, taking advantage of the unique attributes of both bitcoin and Ethereum.

DACFP is providing education about the new spot Ethereum ETFs at its upcoming VISION conference, June 2-4 in Austin, featuring keynotes from MicroStrategy’s Michael Saylor, former CFTC Chair Chris Giancarlo and many others. Register at dacfpvision.com.

DACFP also offers the Certificate in Blockchain and Digital Assets online program (CBDA – a FINRA-listed designation), which gives financial professionals, investors, consumers and students the knowledge they need about blockchain technology, digital assets, NFTs, tokenization, and the metaverse – as well as crypto regulation, compliance and taxation.

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“We are thrilled to secure this significant investment, which is a testament to the strength of our platform and the promise it holds for reinvigorating the real estate investment industry,” stated Bar Mor, Co-Founder and Chief Executive Officer of Agora. “This funding will empower us to expand our company, allocate resources towards research and development, particularly in operational and financial services such as payments, tax, IRA investments, and liquidity solutions, and continue building the best real estate investment experience in the market.”

Agora offers a comprehensive solution for real estate professionals, catering to their investment management needs. The company delivers value to its customers by providing the necessary tools to streamline operations, enhance efficiency, and deliver exceptional experiences to its clients. From optimizing investor relations to automating reporting and streamlining fundraising processes, Agora’s solutions are meticulously crafted to address the diverse needs of modern real estate investment businesses. Agora helps real estate firms globally manage over 70,000 investors and $150B AUM [assets under management] across every single asset class and their co-founders, Bar Mor, Lior Dolinski and Noam Kahan, have a strong background in real estate, creating a unique understanding of their customers and the business.

The company achieved remarkable milestones and growth despite a highly challenging environment for the tech and real estate industries, showing the indispensable value of Agora’s solutions in the sector and growing its revenue three-fold year-over-year. Its commitment to providing a comprehensive solution for investment management led to the launch of tech-enabled financial services, including expert tax, bookkeeping, and international money transfer services. While Agora presently operates predominantly in North America, Europe, and Israel, the company is poised to broaden its presence to additional markets, including Central and South America and Australia.

“Agora’s visionary approach, exceptional leadership, and market expertise, combined with their transformative solutions, have significantly reshaped the real estate investment landscape,” stated Sivan Shamri Dahan, Managing Partner at Qumra Capital. “Having followed their progress over the past couple of years, we’re particularly excited to lead this funding round as we believe in Agora’s potential to become the industry’s standard. Agora represents the new generation of startups that grew rapidly but efficiently during the global downturn and are now ready for their next massive expansion phase. With their track record of execution and dedication, Agora is well-positioned for remarkable growth and continued success as they expand their SaaS solution into new markets and services.”

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According to Guardian’s new Mind, Body, and Wallet^® report, reaching their financial goals is a significant source of stress for individuals. The study, for example, found that more than a third of high-net-worth individuals cited their financial plan for achieving major financial goals as a top concern.

To alleviate concerns and support financial well-being, the Private Client Group is available to high-net-worth clients at no additional cost. As members, clients will have access to:

• Premium products and services, including personalized investment management solutions, alternative investments, structured products, securities-based line of credits, and cash management offerings.
• Personalized services from partner firms, including trust, jumbo mortgage, philanthropic, and business owner solutions.
• Preferred pricing and rates on goods and experiences, including hotels, travel, and family activities.

“Over the years, our Mind, Body, and Wallet report has shown that financial well-being plays an outsized role in influencing overall well-being,” said Marianne Caswell, President of Park Avenue Securities. “The goal of our Private Client Group is to support financial well-being by offering an elevated wealth management experience that puts our clients at the center, looking at their goals, family, and what they want to achieve in life. Rooted in our unique strategy of emphasizing both protection and growth, the Private Client Group is a core part of our commitment to supporting client well-being.”

“In working with high-net-worth clients, their unique circumstances and financial goals require a tailored approach. The establishment of Park Avenue Securities’ Private Client Group builds on the firm’s legacy of offering the products and tools individuals need to take charge of their financial future while introducing an enhanced level of white glove service that meets the needs of high-net-worth individuals,” said John Lentz, Partner and Financial Advisor at Strategic Wealth Group.

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“We are thrilled to welcome Soundmark to EFE. Bill has built an excellent team, and we know they will be a great addition to our firm. We are united by a common goal to serve in the best interest of our clients and to reach more people with the holistic, wealth planning capabilities they need to achieve their financial goals,” shared Jay Shah, chief executive officer at Edelman Financial Engines. “Growth through acquisition is important to our strategy, and we look forward to adding more exceptional teams like Soundmark that share our commitment to clients, value the resources that the top RIA in the industry provides and want to be part of building a modern wealth planning experience.”

“Our continued expansion across the United States, and in this case, the Pacific Northwest, enables us to partner with impressive firms who share our client-first focus and core values,” said Suzanne van Staveren, executive vice president, chief financial officer and chief operating officer at Edelman Financial Engines. “Bill and his team help us to broaden our capabilities and areas of expertise even further, which we know is increasingly important in creating a personalized financial planning experience. We look forward to the role they will play in our exciting evolution and growth.”

“It’s an honor to be joining forces with Edelman Financial Engines, a pioneer and perennial leader within the RIA industry,” said Bill Schultheis, Principal and Senior Wealth Advisor at Soundmark Wealth Management. “We share a similar client-centric approach in our work, and by partnering with EFE our clients benefit from more resources and planning expertise while our planners will have more support and less administrative duties, allowing them to focus even more on our clients.”

The transaction is EFE’s first of 2024 and follows the firm’s recent acquisitions that added planner capacity in key regions, including the Pacific Northwest, Northeast, Northern California and the South, and supplemented the firm’s capabilities in tax and estate planning, and retirement plans for small businesses. EFE will also continue conversations with more potential partners throughout the remainder of the year. Learn about collaborating with EFE and our acquisition history on the firm’s Mergers & Acquisition site.

Baker & McKenzie LLP served as EFE’s counsel in connection with the transaction. Montgomery Purdue LLC served as Soundmark’s counsel.

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“The arrival of Neel is testament to the growth and innovation of our financial services practice and the firm at large,” said Dave Forti, co-chair of Dechert. “Providing the full spectrum of services for asset managers and financial institutions is a strategic focus of the firm, and fintech and cryptocurrency in particular are increasingly important to the clients we serve. Neel’s experience will greatly enhance our ability to offer cutting-edge counsel to our clients, ensuring they are well-positioned to navigate the rapidly evolving and disruptive landscape of digital finance.”

“Neel’s unparalleled insights in fintech and cryptocurrency, along with his ability to strengthen our broker-dealer regulatory support, are vital in reinforcing our commitment to delivering comprehensive and forward-thinking services to our clients,” said Chris Harvey, co-chair of Dechert’s financial services practice group.

Mr. Maitra, joining from a Silicon Valley-based law firm, is a seasoned practitioner with a focus on the fintech and financial services sectors. His background includes serving as a senior special counsel and crypto specialist at the SEC, where he became a key expert on crypto-regulatory issues. His client base includes large venture capital firms, crypto trading platforms, start-ups and major financial institutions exploring the crypto asset space. Mr. Maitra has strong expertise advising on a wide array of securities matters, from broker-dealer compliance to the launch of crypto-based investment products, including, most recently, bitcoin and ether-based exchange-traded products.

Mr. Maitra shared, “I am excited to bring my regulatory and fintech expertise to Dechert’s financial services practice. The firm’s strategic vision for growth in these areas aligns strongly with my own, and I look forward to contributing to our clients’ continued success in these cutting-edge fields.”

The recent arrival of Mr. Maitra underscores a period of significant growth at Dechert, following the earlier appointments this year of partners Brian C. Miner and Eliot L. Relles in New York and partner Cynthia R. Beyea in Washington, D.C.

With more than 200 lawyers, Dechert has one of the largest financial services and investment management teams of any firm. It was the first law firm with a funds practice in all key European fund domiciles, including the UK, Ireland, Luxembourg, Germany, and France, as well as the U.S., the Middle East, and Asia. The firm is consistently recognized by independent experts as a leading law firm for investment funds.

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